Britain's top shares rose on Tuesday, with banks gaining after a deal was reached other Greek debt, but gains were capped as a global growth warning from the OECD subdued demand for energy-related stocks.
Euro zone finance ministers and the International Monetary Fund agreed late on Monday on measures to cut Greek debt by 40 billion euros by 2020, reducing it to 124 percent of GDP and paving the way for Athens to receive its next installment of bailout cash.
It falls short of a resolution, but it definitely takes a layer of systemic risk out of European markets, so that's a support for risk assets, including equities, Mike Ingram, market analyst at BGC Partners, said.
But volumes are still at August levels... and I don't think we have the momentum or volume to punch through [recent resistance levels]
UK banks have less exposure to Greece than their French or German counterparts but are exposed to the euro zone financial system as a whole. Their shares gained 0.7 percent.
Royal Bank of Scotland led FTSE 100 risers, adding 3.5 percent. Of British banks it is one of the most highly exposed to the Greek debt crisis, and lost 1.1 billion pounds on Greek bond investments in 2011.
The better performing banks today are all restructuring stories, like RBS and Lloyds, so it's a risk rally if you like. said Robert Quinn, Chief European Equity Strategist at Standard & Poor's Capital IQ.
Some of the stronger banks don't get the same level of uplift, he added. Lloyds gained 2.9 percent, while HSBC added only 0.2 percent.
RBS also benefitted from an upgrade by UBS, who cited the positive regulatory implications of Canadian central bank head Mark Carney's appointment as Bank of England governor.
We think the appointment... provides the opportunity for the UK regulatory environment to be recast with a more conciliatory tone, the investment bank said in a note.
This helps reduce the tail risk associated with investing in UK banks.
At the close, the FTSE 100 was up 12.99 points, or 0.2 percent, at 5,799.71, with financials, a sector that includes banks, insurers and asset managers, adding